RWE is a German energy company led by CEO Rolf Martin Schmitz. In 2020, Forbes listed the company’s sales at $14.67 billion.
The truth behind the greenwashing
In 2017, RWE was ranked as Europe’s biggest CO2 emitter and as the worst positioned of the 14 largest European power companies for low-carbon transition. The company has since reduced its overall power plant emissions from 131.8 million tonnes of CO2 in 2017 to 68.9 million tonnes in 2020, largely by reducing coal power operations and, for 2020, in light of reduced demand under COVID-19.
However, it continues to mine and burn brown coal, an energy source which is disastrous for the climate, and refuses to phase out coal power by the time experts say is necessary for climate goals – 2030. RWE also plans to ramp up on its fossil gas business, despite the clear need to reduce reliance on gas.
Despite the company’s rebrand, the Climate Action 100+ Net Zero Company Benchmark finds that RWE only meets some of the Benchmark’s targets criteria – it does not disclose both an ambition to reach ‘net zero’ and net zero-aligned short, medium and long-term GHG reduction targets which cover all its relevant emissions.
RWE is also scored ‘Partial’ for committing to align its capital allocation (investments) with its targets, but failing to commit to align future investments with the Paris Agreement goal to limit global temperature rises to 1.5°C above pre-industrial levels.
But its ads tell a different story...
In 2018, RWE’s renewables business amounted to about 5% of its total energy generation. In late 2019, RWE bought a significant set of existing wind and solar energy assets from E.ON – the company did not achieve this growth by building new renewables capacity. Although it has grown its renewable energy operations further recently, and invested most of its capex in wind and solar in 2020, this still makes up the minority of RWE’s business.
In 2020, nearly 80% of the electricity RWE generated was from non-renewable sources: mostly hard coal, brown coal and fossil gas. This compares to nearly 90% in 2019 and around 95% for the preceding 10 years, during which RWE failed to transition its business to renewables. RWE counts carbon-intensive wood biomass as ‘renewable’ alongside true low-carbon generation sources like wind and solar. RWE also bought about a quarter of its electricity from other suppliers in 2020, but does not include these in its electricity generation statistics.
According to a March 2021 study commissioned by Greenpeace, RWE is still the largest emitter in Europe with 89 million tonnes of Scope 1 emissions from its power stations. The study found that in 2019 RWE’s CO2 emissions per kWh of electricity was 792g/KWh – nearly twice that of Germany’s electricity average.
Although the company calls brown coal “reliable, safe and cheap” and despite RWE’s claim that their targets for 2038 phase-out are “in line with the Paris Climate Agreement”, analysis shows that OECD countries like Germany must entirely end coal generation much earlier in order to meet the Paris Agreement’s 1.5C target – by 2030 at the latest.
The Climate Action 100+ Net Zero Company Benchmark scores RWE’s plans for scaling back fossil gas capacity at just 35%, and coal capacity at just 34%, of what is needed to align with the International Energy Agency’s ‘Beyond Two Degrees’ scenario. In this scenario, total temperature rise is limited to 1.75°C by 2100. More and quicker emissions reductions would be required to limit temperature rise to the Paris goal of 1.5°C and to avert more climate harms to people and to the environment.
Whilst the Benchmark scores RWE as ‘slightly ahead’ of the sector average on reducing its share of coal power, it finds RWE to be ‘behind’ its sector on gas.
In September 2019, RWE announced plans to become “carbon neutral” by 2040. This means that the German electric utilities company plans to absorb an equivalent amount of carbon dioxide as it produces. It says it will phase out all coal by 2038, in line with the German government’s deadline, and that “protecting the climate is just as important to us as securing the electricity supply”.
In 2019, the “new RWE” became one of the largest producers of renewable energy in the world after acquiring assets from the energy company E.ON. It announced it would continue to oversee a significant expansion into wind and solar energy, spending €1.5-2 billion a year on renewable energy projects from 2020 onwards and said that “Growing renewable energy is the clear focus of the new RWE”.
In 2020, RWE extended its 2040 carbon neutrality plan beyond its power plant emissions (Scope 1) to all its activities, including its Scope 3 emissions from selling coal or gas. It aims to reduce Scope 1 and 2 emissions by 50% by 2030 and its Scope 3 emissions by 30% by 2030. The company’s 2030 targets were certified by the Science-Based Targets Initiative as in line with the Paris Agreement.
Fighting coal phase-out
RWE’s dogged persistence in digging up and burning brown coal despite its green PR shift and investment in renewables has come under particular criticism. Although it has significantly cut its coal power in recent years in the face of coal phase-out campaigns and laws, in 2020, the company used brown coal to produce and sell 25% of its electricity, compared to 20% from renewables (which itself includes carbon-intensive biomass).
Brown coal is one of the highest emitting fuels, generating around 20% more carbon dioxide than regular coal and 40% more than crude oil for the same power output. RWE generated about a third of its electricity in 2020 from brown coal and from hard coal. It operates three controversial ‘opencast’ coal mines in the German Rhenish area – Garzweiler, Hambach and Inden – which carve away expanding swathes of countryside. RWE’s website continues to promote brown coal as a “valuable raw material” which “will remain vital in the future, too - as a partner in the energy transition”.
RWE’s brown coal mines in Garzweiler and Hambach have been the subject of long-standing protests against RWE’s ambition to destroy the last remaining piece of an ancient forest. RWE’s mining activities also are responsible for the expropriation of local communities. RWE’s brown coal mines in Garzweiler and Hambach have been the subject of long-standing protests against RWE’s ambition to destroy the last remaining piece of an ancient forest. RWE’s mining activities also are responsible for the expropriation of local communities. Residents are fighting eviction and the destruction of their villages to make way for the company’s plans to expand the huge Garzweiler coal mine with a campaign launched as RWE announced “day one for the new RWE” (risking a ‘PR nightmare’ for the company). The villagers question whether their displacement is really necessary, as the world struggles to combat the climate crisis. The company admits that the need to carry on mining coal “was called into question by a few people earmarked for resettlement”, but residents are determined to fight their forced expropriation in the courts. In December 2020, a German government analysis created a scandal as it suggested that even without a coal phase-out law, declining demand for coal was likely to mean that some of RWE’s plans to destroy villages were unnecessary.
RWE says it has now reluctantly accepted the German government’s coal power phase-out deadline of 2038, although it also calls the climate phase-out “far disproportionate”. RWE’s CEO proposed the German government pay the company compensation of over €50 billion for closing its unprofitable coal operations, although the reported value of the entire company was only $18 billion in 2020. After intense negotiations, the government agreed to pay €2.6 billion Euros in compensation, a sum that has been criticized for being too high. Its calculation has not been made transparent to the public. One study found that, if RWE had decided to halve its coal power operations in 2018, it could have saved at least $100m of expenditure needed to bring ageing and increasingly unprofitable coal plants in line with 2021 emissions limits.
In February 2021, RWE drew strong criticism for obstructing the energy transition by bringing arbitration proceedings against the Netherlands, seeking billions of Euros in compensation for the Dutch government’s decision to phase-out coal power generation by 2030 in an effort to reduce the country’s emissions in line with climate goals. The company said that it supports the Dutch emissions reduction target but wants compensation for the disruption to its property from coal phase-out. Campaigners pointed out that RWE commissioned one of its Dutch coal plants in 2015 when a coal phase out was foreseeable, and then sought compensation from taxpayers for closing it. Back in 2015, when the plant was commissioned, RWE’s Annual Report noted that the Dutch government was committed to exit coal power generation. ClientEarth commented that the company’s poor business decisions could not be addressed by shifting losses from stranded assets onto governments and taxpayers.
Maintaining fossil gas
RWE promotes fossil gas as a “bridge” fuel which emits “little” CO2. Whilst it is significantly scaling down coal in the face of coal phase-out laws, RWE is maintaining its fossil gas electricity production. In 2020, gas remained the company’s biggest source of electricity generation, accounting for 34% and outstripping the 20% from renewables (including carbon-intensive biomass).
RWE also wants to expand its gas business – its Annual Report says that fossil gas’ “share of our power plant portfolio is expected to increase further” and that “we are also considering buying” further gas power stations, having snapped up a gas plant in Norfolk in England in February 2020. Despite climate transition goals, the company forecasts “increasing demand for power plant gas”.
The company suggests that gas plants may be retrofitted to run on green hydrogen, and is investing in green hydrogen R&D projects, but also acknowledges that hydrogen is suitable “where it is not possible to switch to green electricity directly, for example in steel production”. The International Energy Agency says that “the case for building new baseload gas capacity is challenged by renewables” – regular electricity generation can switch from gas power to renewable power.
As well as still producing the majority of its electricity from fossil fuels, RWE also operates a significant gas trading business. In 2020, it sold 36,463 GW hours of gas – amounting to nearly 20% of the amount of electricity it sold. RWE aims to establish itself as the leading European middleman in trading fossil gas, and in June 2020 expanded its gas wholesale trading operations by acquiring a stake in a new import terminal for liquefied fossil gas. The company says that fossil gas is the company’s “most important tradable energy resource”. RWE’s gas and coal trading contributed to the 14.4 million tonnes CO2 equivalent of Scope 3 emissions in 2019, which is not listed in its Annual Report but comprises about 15% of the 2019 Scope 1 emissions included there.
RWE’s decisions to invest in gas is at odds with the UN Environment Programme’s warning that gas production must be reduced by 3% each year to avoid locking in severe climate problems. Expert analysis identifies various problems for climate pathways in persisting with gas power, concluding that “[w]hile gas can certainly play a role as a bridging fuel, it too, like coal, faces a rapidly diminishing role in both a well below 2°C, and a 1.5°C-consistent transformation”. The March 2021 Greenpeace report considers that RWE’s gas power plants do not fit with its proclaimed goal of carbon neutrality by 2040.
RWE’s 2020 Annual Report, by contrast, tries to argue that gas “will remain necessary for the foreseeable future”. The company’s website calls gas ‘the front runner of the power generation business’ and talks of “the hope in all three countries that natural gas will be increasingly used to generate energy”. RWE’s Annual Report also claims that its gas power plants “emit little carbon dioxide” – ignoring the problems of methane leakage along the gas supply chain, which can make the overall life-cycle climate impact of gas power worse than coal.
A 2019 analysis by the World Benchmarking Alliance said that, whilst the growth in renewable energy is a significant positive change after a historic reliance on coal means that the company failed to drive any meaningful emissions reductions previously, RWE’s ongoing reliance on gas generation is projected to cause it to fall further behind on a pathway to well-below 2°C warming. The analysis finds that RWE’s rate of decarbonisation must be rapidly increased if it is to align with the Paris goals.
In 2016 and 2017, RWE listed an advertising spend of €268 million per year. The company no longer includes its advertising expenses in its financial reporting, or clarifies how much is on ‘reputational’ advertising now that it has sold its stake in the Innogy retail consumer business.
The company has decided to convert two major coal plants in the Netherlands – Amer and Eemshaven – to burn wood biomass, a controversial and carbon-intensive fuel, alongside continuing to burn coal (‘co-firing’). Although coal only makes up 15% of the fuel for Amer power plant, at Eemshaven it still accounts for 85%. Dutch taxpayers foot part of the bill through state subsidies, although RWE’s Annual Report complains that “[t]o date, there have been no prospects of an increase in these funds” to cover the cost of converting the plants to 100% wood biomass.
Burning wood biomass produces significant levels of CO2, and scientists warn that replacing coal power with wood biomass is actually likely to mean more carbon intensive electricity, not less. Scientists have also expressed fears that increased use of wood biomass would "seriously threaten" forests, a vital carbon sink which remove CO2 from the atmosphere, contributing to a net increase in GHG emissions. Under carbon accounting rules and EU law, the high CO2 emissions from burning wood biomass are counted as zero on the basis that CO2 losses are counted where the wood is harvested. This accounting rule is controversial, but does not mean that biomass is in reality ‘low-carbon’ or ‘carbon-neutral’.
Because of this, scientists warn that biomass risks worsening climate change. In February 2021, hundreds of scientists wrote to world leaders warning that biomass is a “false solution” to climate change because it too often is a cause of logging rather than being purely a paper and timber industry by-product. The scientists said that:
...government subsidies for burning wood create a double climate problem because this false solution is replacing real carbon reductions. Companies are shifting fossil energy use to wood, which increases warming.
RWE counts wood biomass as around a quarter of its ‘renewable’ energy generation in 2020, having nearly doubled biomass generation compared to 2019. The company’s strategy for reaching its targets includes reliance on “zero carbon renewable energy” and “the use of carbon-neutral fuel to produce electricity", but wood biomass isn’t likely to be either zero carbon or carbon neutral in reality. In July 2020, an expert advisory body to the Dutch government said that biomass electricity generation in the Netherlands, where almost all of RWE’s biomass operations are, should be phased out as soon as possible.
More to explore
We’ve put together explainers of some of the key terms and phrases used in these Greenwashing Files.
What are GHGs?
GHGs stands for greenhouse gases - this is the group of seven gases generally seen as contributing to global warming, including carbon dioxide (CO2) and methane (CH4).
What are the Paris goals?
The goals which countries agreed on in Article 2(1) of the 2015 Paris Agreement on climate change, to hold the increase in global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels.
What is CO2e?
CO2e stands for carbon dioxide equivalent, a measure of greenhouse gases. Other non-carbon dioxide greenhouse gases are converted to the equivalent amount of carbon dioxide on the basis of their global warming potential in order to produce a single greenhouse gases measure.
What are Scope 1-3 emissions?
Scope 1-3 emissions are the most widely used international carbon accounting tool. The Greenhouse Gas Protocol categorises a company’s GHG emissions into three groups:
- Scope 1 covers direct emissions from the company’s owned or controlled sources (e.g. burning fuel, company vehicles, emissions from the company’s own industrial processes).
- Scope 2 covers indirect emissions from the generation of electricity, steam, heating and cooling consumed by the company.
- Scope 3 includes all other indirect emissions that occur in a company’s value chain, including emissions from the use of its products.
Is gas clean?
Many fossil fuel companies make questionable claims about the sustainability of fossil fuel 'natural' gas, frequently marketed as ‘the cleanest-burning’ fossil fuel. Burning gas may produce less CO2 than burning coal or oil, but it is still carbon intensive, and not a viable long-term energy source – unlike renewable energy. Climate goals mean that gas use must be reduced, not increased.
On a full ‘lifecycle’ basis, generating electricity by burning gas produces on average more than 10 times the emissions of real low-carbon electricity sources like solar, and more than 40 times the emissions from wind power. As well as emitting significant CO2 when burnt, extracting, transporting and storing fossil fuel gas leaks methane, a powerful greenhouse gas. How much is leaked is critical - if leakage isn’t kept to low enough levels, the overall climate impact of gas can be worse than coal, the dirtiest fossil fuel. Measuring leakage is challenging, and significant advances in reducing leakage are needed.
Is gas a backup for renewables?
Currently gas power is not typically limited to a ‘backup’ function when variable wind and solar renewable energy drops off. Instead, gas is a significant source of regular electricity generation globally, providing electricity that could be replaced by increasingly cheaper renewables. Meanwhile, investments in new gas infrastructure with decades-long operating lifetimes are set to 'lock in' unsustainable greenhouse gas emissions.
Is carbon offsetting the answer to fossil fuels?
Companies’ climate plans increasingly rely on vague talk of huge ‘offsets’ or ‘nature-based solutions’ schemes instead of near-term reductions in fossil fuel production. These plans, even if costed and scalable, can in practice often involve vast commercial monoculture tree plantations, which can cause negative impacts on biodiversity and communities, and struggle to guarantee carbon storage for the hundreds of years which fossil fuel emissions will remain in the atmosphere. Some companies plan to claim the carbon ‘credits’ from existing forests by relying on questionable claims that the corporate offset schemes are the only way to stop deforestation. Carbon removals and offsetting schemes like this can be a part of tackling climate change. But they are not an alternative to prioritising cutting emissions for any sector, let alone for the fossil fuel industry.
Can we rely on carbon capture technology?
Analysis shows that reaching climate targets whilst continuing with today’s oil and gas projects would require a rapid and massive acceleration in carbon capture and storage (CCS). Despite long-running talk of big plans for CCS, companies have never operated it at anything like sufficient scale.
Today, global operational CCS capacity accounts for about 0.1% of global fossil fuel emissions, and the technology cannot capture 100% of emissions. Some companies plan to use, rather than store, captured CO2, often to extract yet more oil. CCS also does not avoid upstream methane emissions and may even increase these due to the additional energy required to run the technology.
There is a history of repeated failures to scale-up CCS, and plans for economically viable CCS have been called ‘wishful thinking’. Experts highlight numerous problems and barriers to short-term deployment and consider that any future development of CCS will now be too little, too late for urgent pathways to a safe climate.
Is biomass sustainable?
Some companies are now turning from fossil fuels to forest biomass energy. Wood biomass is treated as ‘renewable’ under EU and UK law, based on a carbon accounting rule where the GHG emissions from burning biomass are counted as ‘zero’.
However, in reality, burning wood biomass can produce even more CO2 emissions than burning fossil fuels. Sourcing the fuel for biomass through logging is also linked to deforestation - degrading the natural carbon sinks we need for a safe climate. The carbon accounting rule is highly controversial, and does not mean that biomass is in reality ‘low-carbon’ or ‘carbon-neutral’. Because of this, scientists warn that burning wood biomass for energy creates a double climate problem - because it is a false solution to climate change that is replacing real solutions.
What are carbon emissions targets?
Emissions intensity targets – An intensity target is relative to product output, for example the amount of GHGs per barrel of oil produced.
Absolute emissions targets - An absolute target simply refers to the overall amount of GHG emissions attributable to the company. Under many intensity targets, a company can maintain or even increase its overall GHG emissions, provided it increases production enough.
What does CCUS mean?
CCS stands for carbon capture and storage. This is the process of trapping carbon dioxide produced, for example, by burning fossil fuels and then storing it permanently so that it will not contribute to global heating. CCUS, or carbon capture, use or storage, additionally refers to the use of trapped carbon dioxide for some other process.
How do you define capital expenditure?
Capital expenditure is investment by a company on major fixed assets such as buildings, vehicles, equipment or land. This is different from operating expenditure, which represents day-to-day recurring costs like salaries or rent.
The Greenwashing Files have been produced and published by ClientEarth, an environmental law charity registered in England and Wales, with research assistance from DeSmog. For more details, please refer to the registration details in the footer of our website. The information included in the Greenwashing Files is as of 25 March 2021.
The Greenwashing Files have been written for general information purposes and do not constitute legal, professional, financial, investment, shareholder voting or other advice. Specialist advice should be taken in relation to specific circumstances. Action should not be taken on the basis of this publication alone. ClientEarth endeavours to ensure that the information it provides is correct, but no warranty, express or implied, is given as to its accuracy and ClientEarth does not accept responsibility for any decisions made in reliance on this document. The Greenwashing Files contain hyperlinks to other websites as a convenience to the reader. Because ClientEarth has no control over these sites or their content, it is not responsible for their availability, and ClientEarth is not responsible or liable for any such sites or content.